Market forces are driving the resurgence of Made in the USA

| Posted by unionwear

Although many factors have contributed to the manufacturing returning to the USA, the main driver is what drives most decisions: money. A mere 10 years ago, items made in the USA would have cost 200% more than items made in China. Now, it’s down to 25%.

There are two major reasons why this is happening:

Labor cost: not long ago, China faced an overpopulation crisis. In response, they set out on a  One-Child Policy. Because of this, there are now fewer people entering the workforce. And, those people who are entering the workforce want to work for Apple, not work in factories. This shortage of labor has driven up wages.

Politics: the Foxconn factory in Shenzhen, China employs 1 million people, making tons of American goods. A series of investigations found horrific labor violations. As a consequence, employees received two, back-to-back 40% wage increases over two years. They also reduced the number of hours worked from 100 to 60, leading to 25% – 30% wage inflation year over year. At first, Foxconn and other factories responded by cutting corners, leading to many product failures, such as poisoned pet food, thus increasing expenses anyway. Companies tried moving out of China to “cheaper” places like Bangladesh, but those countries didn’t have the infrastructure, raising prices even more.

So, when you factor in shipping and other associated costs, the economic benefits to overseas manufacturing has all-but evaporated, leading to a resurgence of domestic manufacturing.